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The following is an excerpt from a DEF 14A SEC Filing, filed by OLD NATIONAL BANCORP /IN/ on 3/17/2004.
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OLD NATIONAL BANCORP /IN/ - DEF 14A - 20040317 - EXECUTIVE_COMPENSATION

COMPONENTS OF EXECUTIVE COMPENSATION

The compensation program for executive officers consists of the following three components:

- base salary;

- the Short-Term Incentive Plan; and

- the 1999 Equity Incentive Plan.

BASE SALARY

The Compensation Committee establishes the salary of the Chairman and Chief Executive Officer (hereinafter the "CEO"). The base salaries of the Company's next four highest paid executive officers are determined by the Compensation Committee. The same compensation principles are applied in setting the salaries of all other executive officers to assure that salaries are fairly and competitively established. Salary ranges are determined for each executive position based upon survey data that is obtained from a relevant peer group and from the Hay Group, Inc. The Company uses the Hay Job Evaluation System to establish salary grades and ranges for each position based on the knowledge and problem-solving ability required to satisfactorily fulfill the position's assigned duties and responsibilities, its accountability and the impact on the operations and profitability of the Company. The Company's peer group consists of reasonably comparable regional bank holding companies. Relevant peer group data is used rather than the NYSE Financial Index because the peer group companies resemble more closely the asset size and operations of the Company. The peer group data is also used to validate and affirm recommendations presented by the Hay Group, Inc.

From survey data, salary ranges are established each year for the CEO and all other executive positions within the organization. These ranges are designed so that the mid-point of the salary range is approximately the 50th percentile of base salaries paid to comparable positions across a broad spectrum of comparable regional bank holding companies. Within these established ranges, actual base salary adjustments are made periodically in accordance with the guidelines of the Company's salary administration program and performance review system. Continuous

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outstanding performance over an extended period of time could result in a salary at the top end of the established range whereas undistinguished performance could result in compensation at the lower end of the range. In 2003, the base salaries for the executive officers as a group and the CEO were within the established salary ranges.

SHORT TERM INCENTIVE PLAN

In 1996, the Company established a Short Term Incentive Plan (the "STIP") for certain key officers. The STIP provides for the payment of additional compensation in the form of an annual cash incentive payment contingent upon the achievement of certain corporate goals and the achievement of certain business performance goals. The STIP uses various scorecards based on specific corporate and shareholder-related performance goals relating to earnings per share and operating income. Participants were assigned to one of the incentive scorecards based upon their area of responsibility. The minimum incentive award that an employee can earn is 5% of the participant's base salary. The award level is based upon the Company's and the individual participant's performance. The Company does not limit the amount of the award an employee or the CEO may earn under the STIP. The CEO's minimum award opportunity is 27.5% of base salary.

Each fiscal year the Compensation Committee establishes threshold (minimum) and target performance levels under the STIP. If threshold performance is not achieved, there is no payment from the STIP for that period and, if performance exceeds the threshold, actual incentive payments to participants are in proportion to the actual financial performance achieved compared to the performance goals. For 2003, the earnings per share and operating income thresholds established by the Compensation Committee were not met, so there were no STIP payouts for the Chairman and the next four highest paid executive officers of the Company.

1999 EQUITY INCENTIVE PLAN

The Company maintains the 1999 Equity Incentive Plan (the "Plan"). The Board and the Compensation Committee believe that this long-term, stock-based incentive plan enhances the Company's ability to attract, retain and reward management and provides the Company with the ability to develop incentive programs which are responsive to the demands of the marketplace. The Compensation Committee also believes that the stock option grants afford a desirable long-term compensation method because they closely align the interests of management with those of shareholders. Four hundred thirty-eight executive officers, including those listed in the Summary Compensation Table, participate in the Plan. During 2003, the Compensation Committee granted 2,608,356 stock options to executive officers. In determining the grant of stock options to the CEO, as well as other named officers in the Summary Compensation Table, the Compensation Committee took into account the respective scope of responsibility, performance requirements and recent and expected contributions of the Plan participants to the Company's achievement of its long-term performance objectives.

DISCUSSION OF 2003 COMPENSATION FOR THE CEO

Mr. Risinger has served as Chairman and Chief Executive Officer since January 1, 1998. The Compensation Committee used the executive compensation practices described above to determine Mr. Risinger's fiscal year 2003 base salary. In setting both the cash-based and equity-based elements of Mr. Risinger's compensation, the Compensation Committee made an overall assessment of Mr. Risinger's leadership in establishing the Company's long-term and short-term

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strategic, operational and business goals. Mr. Risinger's total compensation reflects a consideration of these competitive issues and the Company's performance.

The Compensation Committee surveyed the total direct compensation for chief executive officers of regional bank holding companies. Based on this information, the Compensation Committee determined a median around which the Compensation Committee built a competitive range for cash-based and equity-based elements of the compensation package. As a result of this review, the Compensation Committee determined a mix of base salary and bonus opportunity, along with an equity position to align Mr. Risinger's compensation with the performance of the Company. The resulting total compensation package was competitive for CEOs in companies comparable in size and complexity to the Company.

Additionally, as part of the review process, the Compensation Committee assessed the Company's financial and business results compared to other companies within the banking industry and the Company's financial performance relative to its financial performance in prior periods and to its financial goals.

For fiscal year 2003, the specific recommendation for Mr. Risinger positioned his target total cash compensation at $1,019,193; base salary was set at $658,932, with a $360,261 bonus opportunity under the STIP. Consistent with the STIP, the performance objectives were based on the Company's earnings per share.

In determining the stock option grant for Mr. Risinger, the Compensation Committee evaluated his total direct compensation compared to CEO's of comparable companies and determined that an award of a non-qualified stock option to purchase 119,536 shares of the Company common stock was appropriate.

SUMMARY

The Compensation Committee is made up of non-employee directors who do not participate in any of the compensation plans they administer. The Compensation Committee approves or endorses all the programs that involve compensation paid or awarded to senior executives.

The Compensation Committee is responsible for seeing that the Company's compensation program serves the best interest of its shareholders. To help meet this responsibility, the Compensation Committee is guided by an independent analysis of the competitiveness of the Company's executive compensation. The Compensation Committee also considers the results of the salary surveys described above.

In the opinion of the Compensation Committee, the Company has an appropriate and competitive compensation program. The combination of sound base salary, competitive short term bonuses, and emphasis on long term incentives provides a balanced and stable foundation for effective executive leadership.

Submitted by:
Charles D. Storms, Chairman
Larry E. Dunigan
Niel C. Ellerbrook
Lucien H. Meis

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EXECUTIVE COMPENSATION AND OTHER INFORMATION

The following Summary Compensation Table shows the annual compensation paid by the Company to its Chief Executive Officer for 2003 and each of the four most highly compensated executive officers, other than the Chief Executive Officer, who were serving as executive officers as of December 31, 2003 (the "Named Executive Officers"). The compensation of each of the Named Executive Officers is reported for each of the last three years.

SUMMARY COMPENSATION TABLE

                                                                                 LONG-TERM
                                           ANNUAL COMPENSATION             COMPENSATION AWARD(S)
                                    ----------------------------------   -------------------------
                                                                            (C)
                                                                         NUMBER OF
                                                                         SECURITIES
                                                             OTHER       UNDERLYING       (D)
                                      (A)        (B)         ANNUAL       OPTIONS      ALL OTHER
NAME AND PRINCIPAL POSITION  YEAR    SALARY     BONUS     COMPENSATION    GRANTED     COMPENSATION
---------------------------  ----   --------   --------   ------------   ----------   ------------
James A. Risinger*........   2003   $691,119   $      0      $5,914       119,536       $85,001
Chairman of the Board        2002    625,019    325,197       6,414       219,398        85,031
and Chief Executive Officer  2001    570,003    319,772       8,737       235,392        52,020

Michael R. Hinton.........   2003   $375,102   $      0      $3,658       136,500       $42,906
President and Chief          2002    350,002    132,441       3,527        91,508        42,906
Operating Officer            2001    310,627    126,736       3,800        97,115        27,956

Thomas F. Clayton.........   2003   $352,102   $      0      $7,567       115,500       $41,736
Executive Vice President     2002    337,002    127,521       6,920        91,508        41,736
Administration &             2001    310,627    126,736       6,186        97,115        27,956
Operations

Daryl R. Moore............   2003   $286,118   $      0      $7,261        79,800       $33,933
Executive Vice President     2002    275,018    104,067       7,262        91,508        33,933
Chief Credit Officer         2001    250,037    102,015       4,980        97,115        22,503

John S. Poelker...........   2003   $350,102   $      0      $3,973       115,500       $31,952
Executive Vice President     2002    332,010    125,632       3,447        91,508        31,952
Chief Financial Officer      2001    305,011    124,445       3,447        98,330        21,351


(a) Salary includes base compensation and income recognized in the form of Director fees paid by the Company or its subsidiaries during the indicated calendar years.

(b) These amounts represent bonuses payable pursuant to the Company's Short Term Incentive Plan (STIP).

(c) The options listed have been adjusted to reflect stock dividends.

(d) All Other Compensation includes the following for Messrs. Risinger, Clayton, Hinton, Moore and Poelker for 2003: (i) Company contribution to the Company's Employee Stock Ownership Plan of $18,000, $18,000, $18,000, $18,000 and $14,000, for each Named Executive Officer, respectively; and
(ii) Company contribution to the Supplemental Deferred Compensation Plan of $67,031, $23,736, $24,906, $15,933, and $17,952, for each Named Executive Officer respectively.

* Mr. Risinger will retire as Chairman of the Board and Chief Executive Officer effective March 31, 2004.

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STOCK OPTION GRANTS

The following table contains information concerning the stock option grants made to each of the Named Executive Officers in the fiscal year ended December 31, 2003.

                                                     INDIVIDUAL GRANT                     GRANT DATE VALUE(3)
                                      -----------------------------------------------   ------------------------
                                      NUMBER OF    % OF TOTAL
                                      SECURITIES    OPTIONS
                                      UNDERLYING   GRANTED TO
                                       OPTIONS     EMPLOYEES    EXERCISE   EXPIRATION
NAME                                   GRANTED     IN 2003(1)   PRICE(2)      DATE      GRANT DATE PRESENT VALUE
----                                  ----------   ----------   --------   ----------   ------------------------
James A. Risinger...................   119,536        4.6%       $21.71     1/31/13             $524,763
Michael R. Hinton...................   136,500        5.2%       $21.71     1/31/13             $599,235
Thomas F. Clayton...................   115,500        4.3%       $21.71     1/31/13             $507,045
Daryl D. Moore......................    79,800        3.1%       $21.71     1/31/13             $350,322
John S. Poelker.....................   115,500        4.3%       $21.71     1/31/13             $507,045


(1) Based on an aggregate of 2,608,356 option shares granted in fiscal year 2003.

(2) The exercise price per share of options granted represented the fair market value of the underlying shares of common stock on the option grant date, which was equal to the closing price as reported by the NYSE on the option grant date. The options vest over a four year period and the exercise price may be paid in cash, in shares of the Company's common stock valued at fair market value on the exercise date or through a cashless broker-assisted exercise procedure involving a same-day sale of the purchased shares.

(3) Black-Scholes methodology utilized.

STOCK OPTION EXERCISES AND FINAL YEAR-END VALUES

The following table sets forth information concerning the fiscal year-end number and value of unexercised options; and the number of options exercised during fiscal year 2003 with respect to each of the Named Executive Officers.

                                                           NUMBER OF SECURITIES          VALUE OF UNEXERCISED
                                                          UNDERLYING UNEXERCISED        IN-THE-MONEY OPTIONS AT
                                 SHARES                 OPTIONS AT FISCAL YEAR END        FISCAL YEAR END(1)
                               ACQUIRED ON    VALUE     ---------------------------   ---------------------------
NAME                            EXERCISE     REALIZED   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
----                           -----------   --------   -----------   -------------   -----------   -------------
James A. Risinger............       --           --       244,081        380,996           --             --
Michael R. Hinton............       --           --        99,501        240,775           --             --
Thomas F. Clayton............       --           --        99,501        219,775           --             --
Daryl D. Moore...............       --           --        99,501        184,075           --             --
John S. Poelker..............       --           --       100,717        220,991           --             --


(1) Based on the fair market value of the Company's Common Stock at fiscal year end ($21.762 per share), and such value is equal to the closing price as reported by the NYSE at that date, less the exercise price payable for such shares.

RETIREMENT PLAN

The Old National Bancorp Employees' Retirement Plan (the "Retirement Plan") is a qualified, defined benefit, non-contributory pension plan covering substantially all employees of the Company and its subsidiaries and affiliates with one or more years of service with the Company or its subsidiaries and affiliates, and with credited service accruing from the date of employment, provided that the employee has not less than 1,000 hours of service (as defined in the plan) during such period.

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The amount of annual contribution attributable to specific individuals cannot be determined in a meaningful manner. The following table shows the estimated annual pensions payable to eligible employees upon retirement at age
65. The amounts shown do not reflect any reduction related to Social Security earnings or for the survivor benefit features of the Retirement Plan, the application of which would reduce the amount of pension payable.

PENSION PLAN TABLE (1)

                                                   YEARS OF SERVICE
    FINAL AVERAGE      ------------------------------------------------------------------------
       SALARY             5        10         15         20         25         30      35 & UP
    -------------      -------   -------   --------   --------   --------   --------   --------
$100,000.............  $ 7,250   $14,500   $ 22,750   $ 31,000   $ 40,750   $ 50,500   $ 60,250
 150,000.............   10,875    21,750     34,125     46,500     61,125     75,750     90,375
 200,000.............   14,500    29,000     45,500     62,000     81,500    101,000    120,500
 250,000.............   18,125    36,250     56,875     77,500    101,875    126,250    150,625
 300,000.............   21,750    43,500     68,250     93,000    122,250    151,500    180,750
 350,000.............   25,375    50,750     79,625    108,500    142,625    176,750    210,875
 400,000.............   29,000    58,000     91,000    124,000    163,000    202,000    241,000
 450,000.............   32,625    65,250    102,375    139,500    183,375    227,250    271,125
 500,000.............   36,250    72,500    113,750    155,000    203,750    252,500    301,250
 550,000.............   39,875    79,750    125,125    170,500    224,125    277,750    331,375
 600,000.............   43,500    87,000    136,500    186,000    244,500    303,000    361,500


(1) The law in effect at December 31, 2003 prohibited the distribution of benefits from the Retirement Plan in excess of $160,000 per year expressed as a straight life annuity. It also prohibited compensation in excess of $200,000 to be used in the computation of the retirement benefit. Both amounts are indexed for inflation.

The Retirement Plan provides for the payment of monthly benefits in a fixed amount upon attainment of age 65. As a normal form of benefit, each eligible participant is entitled to receive a monthly pension for his or her life based on years of service and "average monthly compensation" (which excludes bonuses). In general, the formula for determining the amount of a participant's monthly pension is average monthly compensation multiplied by 1.45% for the first ten years of service, 1.65% for the next ten years of service, and 1.95% for the next fifteen years of service, less any amount related to Social Security earnings. In general, the amount of the reduction is .59% of average monthly compensation (up to a maximum of 125% of covered compensation) multiplied by all years of service up to 35 years of service. The standard retirement benefit for married participants is payable in the form of a joint and survivor annuity in an amount which is actuarially equivalent to the normal form of benefit. Instead of an annuity, participants may elect to receive a single sum cash settlement upon retirement in an amount that is actuarially equivalent to the participant's normal form of benefit.

2003 base salary figures for the CEO and the next four most highly compensated Executive Officers of the Company are set forth in column (a) in the Summary Compensation Table on page 21. The Retirement Plan was frozen as of December 31, 2001, except for employees who were at least age 50 or who had 20 years of vested service as of December 31, 2001. As of December 31, 2003, Mr. Risinger had 26 years of vested service; Mr. Hinton, 24 years; Mr. Clayton, 16 years; and Mr. Moore, 25 years. Mr. Poelker is not accruing benefits under this Plan but does continue to accrue service for eligibility of an immediate early retirement benefit.

For certain employees, in addition to the persons listed in the Summary Compensation Table, whose annual retirement income benefits under the Retirement Plan exceed the limitations imposed by the Internal Revenue Code of 1986, as amended, and the regulations thereunder (including, among others, the limitation that annual benefits paid under qualified

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defined benefit pension plans may not exceed $160,000), such excess benefits will be paid from the Company's non-qualified, unfunded, non-contributory supplemental retirement plan.

AGREEMENTS WITH CERTAIN OFFICERS

On January 1, 2004, the Company entered into new change of control severance agreements with Messrs. James A. Risinger, Thomas F. Clayton, Michael R. Hinton, Daryl D. Moore and John S. Poelker. Each executive is entitled to benefits under his severance agreement upon any termination of the executive's employment by the Company (except for, and as is more specifically described in each severance agreement, termination for cause, disability, voluntary retirement or death), or upon a termination of employment by the executive under certain circumstances specified in his severance agreement, during the two-year period following a change in control (as defined in the severance agreements) of the Company which occurs during the term of the severance agreement.

In the event of a termination of employment, the executive will be entitled to receive a lump sum cash payment equal to the aggregate of: his then-effective base salary through the date of termination; all amounts due to the executive under the Company's accrued vacation program through the date of termination; and a certain amount under the Retirement Plan. In addition, the Company must pay to James A. Risinger, Thomas F. Clayton, Michael R. Hinton and John S. Poelker in a lump sum cash payment an amount equal to 2.99 times the average annual base salary paid to him by the Company in the five calendar years preceding the date of termination. For Daryl D. Moore, the lump sum payment is equal to two times the average annual base salary paid to him by the Company in the five calendar years preceding the date of termination. The severance agreements further require the Company to cause to be vested in each executive's name those awarded but unvested shares held in the executive's account in the Restricted Stock Plan and Stock Option Plan and all amounts due the executive under the Company's Short Term Incentive Plan.

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SHAREHOLDER RETURN PERFORMANCE COMPARISONS

The Company is required to include in this proxy statement a line graph comparing cumulative five-year total shareholder returns for the Company's common stock to cumulative total returns of a broad-based equity market index and a published industry index. The following indexed graph compares the performance of the Company's common stock for the past five years to the Russell 1000 Index and the NYSE Financial Index.
(PERFORMANCE GRAPH)

                                                  OLD NATIONAL BANCORP            RUSSELL 1000               NYSE FINANCIAL
                                                  --------------------            ------------               --------------
12/31/98                                                 100.00                      100.00                      100.00
12/31/99                                                  93.54                      120.93                       99.08
12/31/00                                                  92.35                      110.24                      124.08
12/31/01                                                  84.05                      105.87                      113.87
12/31/02                                                  87.44                       81.59                       97.90
12/31/03                                                  89.27                      104.05                      125.64

The comparison of shareholder returns (change in December year end stock price plus reinvested dividends) for each of the periods assumes that $100 was invested on December 31, 1998, in common stock of each of the Company, the Russell 1000 Index, and the NYSE Financial Index with investment weighted on the basis of market capitalization.

TRANSACTIONS WITH MANAGEMENT AND OTHERS

The Executive Officers and Directors of the Company are at present, as in the past, customers of one or more of the Company's subsidiaries and have had and expect in the future to have similar transactions with the subsidiaries in the ordinary course of business. In addition, some of the Executive Officers and Directors of the Company are at present, as in the past, officers, Directors or principal shareholders of corporations which are customers of these subsidiaries and which have had and expect to have transactions with the subsidiaries in the ordinary course of business. All such transactions were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectibility or present other unfavorable features.

During 2003, the Company paid $32,072,248.87 for engineering, design and construction services to Industrial Contractors, Inc. in connection with its role as general contractor for the construction of the Company's new headquarters building in Evansville and for renovations to the Old National Bank Tower, renovations to the Operations Center in Evansville and for work at other Old National Bank branch locations. Alan W. Braun, Chairman and CEO of Industrial Contractors Inc., is currently a Director of the Company.

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BROKERAGE PARTNERS